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DENVER – A federal appeals court panel this week rejected an appeal
by a hemp industry consortium and a Denver law group that had challenged the Drug Enforcement Agency’s Final Rule classification of cannabis derivatives as Schedule I drugs.

The Denver-based Hoban Law Group sued
over the DEA’s final rule
on cannabis extracts in January 2017, asking the 9th U.S. Circuit Court of Appeals in San Francisco to overturn the rule, saying it could “potentially devastate” businesses that manufacture CBD oils and use industrial hemp and other cannabinoids in their products.

The law firm sued on behalf of the Hemp Industries Association, RMH Holdings LLC and Centuria Natural Foods, Inc. – all businesses that use hemp or other government-approved parts of the cannabis plant in their products.

The DEA argued that its rule would allow for better tracking of cannabinoids. But Hoban lawyers argued that hemp-derived cannabinoids were protected under the 2014 Farm Bill’s language allowing for hemp.

The three-judge panel agreed in part, saying the Farm Bill “pre-empts” the Controlled Substances Act, but denied the group’s petition for review of the final order, saying it did not comment during a previous notice-and-comment period. Still, the group’s lawyers said they felt that part of the ruling would be beneficial moving forward.

“Though we appreciate the Court's finding in favor of the legitimacy of the Farm Bill's hemp amendment, we are still disappointed with the Court's findings that the Final Rule does not interfere with lawful, hemp-related business activities, as even 29 members of Congress confirmed in their Amicus Brief to the Court,” attorney Bob Hoban said in a statement. “Given the pervasive confusion and irreconcilable conflicts of the law that have led to product seizures, arrests and criminal charges against those involved in the lawful hemp industry, the Petitioners believe that the Final Rule must be invalidated, absent the Court clarifying and further resolving these conflicts and their severe consequences.”

Hoban said the group was continuing to weigh their options in the case.

The ruling is expected to have some bearing as hemp and its extracts become closer to becoming legal.

Hemp farming has exploded in Colorado
in recent years. There are now around 17,000 acres of hemp being grown in the state, compared to just 1,400 in 2014.

Both of Colorado’s U.S. senators have cosponsored Senate Majority Leader Mitch McConnell’s hemp legalization bill
, and the FDA is expected to make a decision in coming months whether to give final approval to a pharmaceutical-grade CBD oil
that would become the first FDA-approved product derived from the cannabis plant.

The Colorado General Assembly also sent a bill
to Gov. John Hickenlooper's desk last week to open up state law to allow pharmacies to sell cannabidiol drugs approved by the FDA.

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